The Struggle for Dominance Between Tacit Knowledge and AI Thinking

Introduction|As Experience Fades and AI Takes Over—Who’s Still Thinking?

Amid the wave of smart manufacturing, enterprises are racing to adopt AI, automation, and data platforms in hopes of making production faster, more stable, and more precise. But as more decision-making power is handed over to systems, can the hands-on experience and nuanced judgment once held by seasoned workers still be preserved?

In the past, factory intelligence came from people. Today, thinking is increasingly being delegated to algorithms, putting corporate adaptability to the test. AI can improve efficiency, forecast risks, and optimize processes—but it cannot independently learn what is unspoken and unquantifiable: tacit knowledge. Without recognizing this gap, companies may mistakenly believe transformation is complete, while in fact losing their ability to respond wisely to change.

At DigiHua Intelligent, we’ve learned from real-world system implementation and developed a practical approach that positions AI not just as a tool, but as a co-creator in decision-making: the Shuhari framework. More than a phased methodology, Shuhari is a mindset that enables experience, knowledge, and AI to evolve and collaborate together.

 

Summary

 From Experience Loss to Cognitive Capital: The True Challenge of AI Adoption

This article begins by examining structural issues in manufacturing transformation. While the commonly promoted trilogy—automation, data platforms, and digital upskilling—has laid the groundwork for smart manufacturing, it often overlooks one critical element: the digital encapsulation and transmission of tacit knowledge. Without it, valuable experience is lost, and AI systems struggle to inherit essential judgment capabilities.

As AI takes on more tasks and thinking becomes increasingly outsourced, organizations risk falling into cognitive debt and cognitive amnesia—where decisions lack traceability, learning stagnates, and the ability to adapt quickly in times of disruption is compromised. To address this challenge, DigiHua proposes the Shuhari methodology:

  • Shu (Preserve): Begin with frontline knowledge. Introduce AI through deliberate practice to help it internalize human experience.

  • Ha (Break): Establish human-AI dialogue mechanisms, encouraging workers to question and refine AI decisions.

  • Ri (Depart): Evolve toward hybrid intelligence frameworks where AI becomes part of the cognitive system—amplifying human thinking without replacing human agency.

In conclusion, the article stresses that real resilience and long-term competitiveness cannot rely solely on process efficiency. Instead, companies must build systems that convert knowledge into cognitive capital. People will leave. Factories will change. But only when experience and human agency are truly passed on can the full value of a smart factory be realized.

 

1. The Disappearing Experience: The Crisis of Tacit Knowledge in Manufacturing

Veteran Workers Don’t Always Follow SOPs—But They Get It Right: The Value of Tacit Knowledge
In many manufacturing settings across Taiwan, a single phrase often reveals the root of operational issues: “If Old Li isn’t here, the machine won’t run properly.” Whether in precision machining, plastic injection, or semiconductor packaging, veteran workers rely on years of accumulated intuition—touch, sound, and experience-based judgment—to quickly resolve anomalies that systems can’t anticipate.
These seasoned workers may not strictly follow SOPs, but they often achieve results more efficiently. This is the essence of tacit knowledge—deeply embedded in minds and hands, but difficult to document or teach through reports and manuals.

Such knowledge, built from hands-on experience, is an enterprise’s most authentic form of cognitive capital, yet it is also its most fragile asset. As younger generations lose interest in manufacturing and labor shortages intensify, the break in this knowledge transmission is no longer just a workforce issue—it signals a shift in the very locus of thinking on the production floor.

According to CSRone, “The factory of the future must be people-centric, valuing human contribution and dignity at work.” Yet as AI deployment accelerates and automation expands, we’re quietly witnessing the exit of human cognition, resulting in a silent threat of outsourced thinking and cognitive offloading.

 

From Distributed Cognition to Automated Decision-Making—What’s at Stake
Traditionally, manufacturing relied on distributed cognition—where cognitive tasks were not confined to individual brains but spread across people, tools, language, and the physical environment in a shared effort to adapt to change.
But now, AI is no longer just a passive tool; it has become part of the cognitive system itself. As decision-making is increasingly centralized in algorithms and automated processes, the room for flexible human intervention is vanishing. The real concern isn’t about veterans retiring or labor gaps—it’s that vital experience is disappearing alongside them.

 

The Problem Isn’t “No One Teaching”—It’s “No One Willing to Learn”
Today’s challenge goes beyond the aging workforce. It’s not just that veterans are retiring—it’s that no one wants to take over. According to a McKinsey report, younger generations are increasingly uninterested in manufacturing jobs. Even with attractive salaries, companies are struggling to recruit, let alone train successors.
In the past, there was still time for apprenticeship, peer learning, and gradual skill transfer. Now, companies can’t even find willing trainees, making meaningful succession nearly impossible.

Digging deeper, the core issue is that if this experience isn’t captured and transformed, it will vanish outright. A veteran’s real value doesn’t lie in reading dashboards or operating software—it lies in their pre-verbal knowledge—like detecting abnormal machine vibrations or recognizing faulty material mixtures by smell.
These critical signals can’t be picked up by AI or sensors. Without someone who can recognize them—and without systems capable of learning them—a smart factory becomes a senseless, automated factory.

As we chase automation and efficiency, we must pause and ask:
“Have we thoughtfully designed mechanisms for preserving knowledge? Or have we reduced technical succession to merely pressing the AI button?”

 

International Warnings on the Fragile State of Knowledge Transfer
This looming crisis has already been flagged by global consulting firms and industry analysts. McKinsey emphasizes that to truly embrace the Fourth Industrial Revolution, manufacturers must redefine the role of human capital.
Human resources should not be seen as a cost to minimize, but as a long-term investment. Workers are not cogs executing commands—they should be collaborators in designing technologies, processes, and decisions.
This is the heart of people-centered management thinking—a principle that will determine whether manufacturing can evolve without losing its most human strength: experience.

 

A Dual Gap in Cognition and Workforce: Technology Advances, People Stand Still

According to McKinsey’s research, many factories have already seen measurable progress in AI adoption and automation. Yet, they still struggle to sustain improvement due to unstable talent pipelines and a persistent skills gap. One core reason is a growing cognitive mismatch: while technologies advance rapidly, public perception of factory work—dirty, exhausting, outdated—has not.
This structural disconnect creates a paradox for the manufacturing sector: technological capabilities are evolving, but workforce thinking remains stagnant.

At the heart of the issue lies a critical question:
As companies double down on AI and automation, have they also built mechanisms that allow people to participate in, understand, and even lead AI-powered decision-making?

“Human-centered” does not mean shifting focus away from people toward AI. It means designing AI as a collaborative tool, a medium through which human experience and judgment are extended, not erased.
Without such a system, transformation risks reducing the factory floor to a sterile warehouse of automated procedures—where humans simply follow steps to interact with models—rather than cultivating a resilient organization where cognitive capital and human potential are truly activated.

Based on observations from DigiHua, over the past three years of AI proliferation, many clients do not lack data from human experience—it’s that this valuable shop-floor wisdom has not yet been properly captured, translated, or activated.
With veteran workers retiring and labor gaps widening, manufacturing is now facing more than a capacity shortage—it’s confronting a void in its cognitive system.
AI without embedded knowledge is just a computing tool. A factory without lived experience is merely a mechanical loop of input and output.

 

As AI Gets Smarter, Do We Still Control the Thinking?
The loss of agency is now the deeper concern in knowledge transfer. It’s not that people refuse to teach—it’s that the industry has yet to build an ecosystem where experience is learnable, shareable, and adaptable.

And today, as generative AI and machine learning tools flood the scene, we must ask a new question:
Are we merely replacing tacit knowledge with an even more opaque black box?

There are always two sides to innovation. While many companies are already implementing AI, we must examine the outcome:

  • Has it helped us better understand manufacturing—or simply made us more dependent on systems?

  • Has it amplified human expertise—or quietly stripped away our authority to think?

These are the questions worth exploring. And they mark the next inflection point in our journey toward truly intelligent manufacturing.

 

 

2. When AI Enters the Factory: What We Can Do

As Labor Shortages Persist, AI Becomes Manufacturing’s Key Enabler
With skilled labor becoming increasingly scarce and experience gaps widening, AI has emerged as a crucial solution for the manufacturing sector. From visual inspection and machine monitoring to process optimization and intelligent scheduling, more and more factories are integrating AI into daily operations.
This is no longer an experimental technology—it’s a real-world transformation tool. Everyday applications like automated image interpretation, real-time anomaly detection, parameter optimization, and even using generative AI to summarize reports are already happening on the shop floor.

At DigiHua, we’ve seen AI go beyond isolated use cases and begin to infiltrate entire factory workflows. Enterprises are investing heavily in building data platforms, connecting sensors, and deploying machine learning models—all in the hopes of saving time, reducing errors, improving yield, and compensating for the loss of veteran staff.
What we’ve also observed is that AI is no longer just a tool for efficiency—it’s increasingly being positioned as a new form of experiential intelligence.

 

From Quality Control to Scheduling: AI Applications Are Rapidly Expanding
The most common use case is at the frontline of quality inspection. Tasks traditionally done by human eyes—such as detecting scratches, holes, or misalignment—are now handled by AI-powered vision systems using deep learning models.
This not only boosts yield but also shortens training cycles for staff. In industries with high precision requirements—like 3C, metal processing, and semiconductors—AI-based quality control has become a top priority for implementation.

Another fast-growing application is automated report generation and data aggregation. Previously, compiling data on machine utilization, maintenance logs, or energy usage required significant manual effort. Now, with generative AI integrated into BI tools, teams can input data structures and formatting needs to generate multiple versions of reports, summaries, or even natural-language explanations of anomalies.
This doesn’t just enhance efficiency—it transforms frontline supervisors from data clerks into decision analysts.

A third use case gaining momentum is AI-assisted scheduling and parameter optimization. In processes like injection molding or SMT, AI leverages historical and real-time data to recommend optimal molding conditions, sequence work orders, or adjust scheduling based on deadlines and capacity.
These tools help manufacturers navigate the growing complexity of high-mix, low-volume production and volatile lead times.

Today, these applications are no longer rare—they’ve become part of a new norm: “If you implement AI, it’s hard; if you don’t, it’s fatal.”

 

AI Aids Decision-Making—but Outsources the Thinking Process
While these AI applications have significantly improved efficiency and stability, a new concern is surfacing:
Do we really understand how these decisions are made?

As AI becomes the co-pilot of factory decisions, operators shift into the role of observers. Many decisions become predefined, modeled, or even executed automatically.
Over time, teams move faster—but understand less. They begin to lose clarity on why a particular sequence was chosen or why certain parameters are optimal.
This is the downside of cognitive offloading: when we delegate complex tasks to machines, we may forget how to think through them ourselves—and leave no trace of the reasoning process.

 

When Judgment Is Let Go, AI Begins to Rewrite How Organizations Learn
Just as navigation apps have eroded people’s sense of direction, AI without human feedback mechanisms can gradually diminish decision-making agency.
Yes, AI saves time—but it also subtly reshapes how decisions are made, and more critically, how organizations learn.

As workflows become more streamlined and experience more diluted, what’s truly happening behind this wave of AI transformation is a structural shift in responsibility:
Who thinks? Who is accountable?

If companies fail to recognize this shift, they won’t just miss out on AI’s full potential—they may one day discover that their capacity to learn and adapt has silently eroded.

 

 

3. The Transformation Trilogy: Automation, Data Platforms, and Workforce Enablement

As smart manufacturing becomes a common strategy for industrial upgrading, more companies are embarking on systematic transformation initiatives. These efforts often begin with technology infrastructure, then gradually extend to process optimization and workforce development—forming a widely adopted three-stage transformation roadmap:

  1. Implementing automation and integration solutions,

  2. Building data and AI platforms, and

  3. Promoting digital literacy and frontline education.

Step 1: Begin with a Virtual Factory—Integrate Your Automation Infrastructure

In the early stages of smart manufacturing, we advise companies to start by building a “virtual factory.” This involves using automation technologies to interconnect machines and processes, reducing reliance on manual operations while enhancing real-time monitoring and feedback.

By unifying production processes and equipment through integration, manufacturers can also systematically record key parameter changes, providing a valuable basis for future optimization.

For example, in DigiHua’s iMES (intelligent Manufacturing Execution System), the foundational “Equipment Recipe Management” module can be paired with higher-level management functions to automatically load machine parameters or production logic based on each product’s specific requirements.
This reduces human error, increases process stability, and—most importantly—translates experiential knowledge into reusable digital assets. Instead of being lost when staff leave, key production know-how is embedded in system workflows and preserved over time.

Moreover, with sensor integration, remote monitoring modules, and equipment communication interfaces, managers no longer need to be physically present to gain a real-time view of production, alerts, and performance indicators. This not only strengthens operational control but also resolves the long-standing issue of delayed decision-making information.

 

Step 2: Build a Data Platform—Connect AI Tools to Turn Knowledge into Assets

Traditionally, many manufacturing processes have relied on veteran workers’ tacit knowledge and verbal transmission. But as data volumes grow and AI tools become more accessible, this once-incommunicable knowledge can now be systematically captured and utilized through platform architecture.

By implementing a robust data platform, companies can continuously collect granular details from every process step, anomaly, and machine feedback, building a structured data pool to support downstream decision-making.

These records are no longer for historical reference only. With data visualization, trend analysis, and machine learning, they can be transformed into actionable insights tailored to various roles:

  • Frontline supervisors can identify machine anomalies in real time,

  • Engineering teams can track yield fluctuations, and

  • Executives can monitor overall performance trends through integrated KPIs.

As AI tools mature, many DigiHua clients have begun integrating off-the-shelf or custom ML modules for use cases like yield prediction, dispatch optimization, and energy scheduling.
These scenarios, once dependent on human intuition, are now being translated into machine-learnable logic.

When tightly integrated with data platforms, these AI applications not only enhance operational efficiency but also help accumulate organizational knowledge—building a long-term, evolving intelligence infrastructure.

 

Step 3: Empower Frontline Workers Through Digital Transformation Education—Make Systems Collaborative, Not Replacive

In our experience guiding smart manufacturing initiatives, a common challenge arises: frontline workers and veteran technicians often approach new systems with hesitation. Some worry that their years of hands-on experience will be replaced by machines; others feel resistant toward unfamiliar digital tools.
These psychological barriers often become the true hidden resistance behind transformation efforts.

That’s why, if companies want their smart factory journey to be more than just a surface-level upgrade, they must begin with culture and mindset—helping frontline teams understand that digital tools are not here to replace them, but to assist in reducing repetitive tasks, avoiding human errors, and enhancing the value of their work.

Common strategies include:

  • Hands-on training delivered by consultants during the initial implementation phase, using real-case walkthroughs and role-based learning;

  • Visualization dashboards and language-adaptive interfaces to bridge generational or learning-curve gaps, so that all personnel can find their own entry points into digital workflows.

True digital transformation only becomes sustainable when frontline personnel feel involved, and when they understand that their experience is not being erased—but embedded into the system. This creates not just adoption, but organizational resilience through collective participation.

 

The Transformation Trilogy Isn’t the Final Answer—A Critical Blind Spot Remains

This three-part transformation—process integration, data platform, and employee education—has undoubtedly opened the door to smart manufacturing for many companies. Over time, it has even evolved into what seems like a foolproof blueprint.

However, beneath this widely adopted model lies a critical blind spot:
Have your systems and tools truly captured the valuable experience within your organization?

Many solutions in the market emphasize data integration, workflow automation, and employee onboarding—but few address the deeper layer:

  • How do we preserve the judgment,

  • The fine-tuning logic,

  • And the craftsmanship intuition that resides in the minds of veteran operators?

In other words, the trilogy may successfully build the framework and momentum of smart manufacturing, yet still leave behind an invisible void—where real-world experience is never digitized or retained.

If companies fail to recognize this gap, they may only realize during future system upgrades or workforce turnover that, while the AI models still exist, they can no longer replicate the same quality, adaptability, or nuance.

This is the next challenge enterprises must confront:
If AI is merely a tool, then who should retain the authority to think, judge, and lead?
The answer will determine not just the success of digital transformation, but whether manufacturing wisdom can truly evolve into sustainable, collective intelligence.

 

 

4. AI Doesn’t Make Mistakes—But Have You Stopped Thinking?

As AI takes over decision-making, have we also surrendered our ability to think?

When every process becomes automated, data is seamlessly integrated into systems, and AI can actively provide suggestions, we are indeed stepping into a faster, more precise, and more stable world of production. But behind these seemingly flawless systems, a deeper shift is quietly taking place: the outsourcing of human thought.

Earlier, we discussed how the three-phase transformation framework builds the backbone of smart manufacturing. However, the tacit knowledge held by experienced workers—their intuition and reasoning—may not be captured by AI. As AI increasingly takes over “judgment-based tasks,” humans transition from active participants to passive executors, from knowledge holders to mere recipients of process flows. We begin to lose the reflex of asking “why we do it this way,” replacing it with “I’m just following the system’s recommendation.”

This is the phenomenon known as Cognitive Outsourcing. The smarter the system becomes, the less we feel the need to think. Over time, we don’t just risk a technical disruption—we risk losing cognitive ownership. When problems arise, no one knows what went wrong. When models are updated, no one can explain why outcomes changed. When quality issues occur, the only response is, “That’s just what the AI suggested.”

From decision-making to learning, from experience to knowledge, this division of labor led by AI may boost speed and stability—but if we give up control of the process, what we lose is not just know-how, but the very resilience of the organization.

 

Feeding AI with Data, or Collaborating with It?

In many factories, the typical approach to AI implementation is a one-time input of historical parameters and yield records, followed by instructing new workers to “just follow the AI.” Scheduling by suggestion, parameter setting by formula, anomaly handling by prompts—this is a classic case of Cognitive Offloading, where we delegate complex thinking and organizing to AI.

While this approach may replicate a senior technician’s setup quickly, it also outsources the learning curve to the system, weakening the distributed intelligence between humans and machines.

There is, however, another way forward—treating AI as a responsive, conversational assistant. Humans continue to provide feedback; models continue to evolve. In this dynamic, AI becomes a partner, not a final answer, evolving alongside the factory floor. Companies must choose: Do you want a black box that simply “copies the recipe,” or a knowledge engine that “iterates with you”?

 

When You Borrow Thinking from AI, You’ll Eventually Need to Return It

When organizations rely on models without validating their assumptions, Cognitive Debt starts to accumulate. A recent MIT study revealed that 83% of ChatGPT users were unable to accurately recall sentences they themselves had written just minutes earlier—because they had outsourced the thinking process. In contrast, only 11% of participants in the “brain-only” group—those who wrote without AI assistance—experienced the same difficulty.

Imagine the stark difference between 83% and 11%, then apply that insight to your factory. If we trade future cognitive capacity for short-term convenience, we may face these common issues:

  • The reasoning behind decisions is hidden, making root-cause analysis difficult.

  • New needs can’t be self-adjusted—only model updates can help.

  • Employees lose the initiative to ask critical questions due to outsourced cognition.

Like technical debt, cognitive debt accumulates interest. The more complex the environment, the more likely AI and reality will diverge. One unexpected event can cause the entire AI-reliant process to collapse.

 

When GPS Fails, We Lose Our Sense of Direction

A more subtle side effect is Cognitive Amnesia—similar to how relying on GPS weakens our spatial awareness. Over-reliance on SOPs and AI prompts can lead teams to “just follow instructions” rather than “think critically.” When models falter or face unfamiliar conditions, workers resemble drivers suddenly lost after GPS is turned off—disconnected from machines, materials, even the entire production line. When the small, scattered insights of individuals are consumed by AI, the organization loses its most vital asset: the ability to adapt in real time under uncertainty.

 

So, Is Your AI a Partner or a Replacement?

As processes and feedback loops increasingly depend on AI, knowledge formation becomes system-driven rather than human-driven. Ultimately, the question is: Are you using AI to support the frontline, or have you handed the entire frontline over to AI? This is more than an operational choice—it’s a critical divergence in how your organization defines “learning,” “responsibility,” and “agency.”

If we choose to let AI replace us, it will eventually take over human judgment: turning experience into data, intuition into models, and reflection into defaults. Over time, organizations will accumulate cognitive debt, lose agility, and even forget why they made certain decisions in the first place. And when AI fails, we’ll be helpless.

But what if we choose to make AI a partner? That would mean co-evolution—embracing feedback, allowing adjustments, helping us learn faster and decide smarter. AI’s true value lies not in replacing human thought, but in extending human capabilities.

That’s why the next step is not simply whether to adopt AI, but how to establish a methodology that allows human experience and AI to co-exist and co-evolve. We call this framework Shu-Ha-Ri: a path that enables AI to inherit experience, enhance cognition, and become a trustworthy decision-making partner.

 

5. DigiHua’s Differentiation: Using the “Shu-Ha-Ri” Framework to Help AI Inherit Human Experience

As the industry finds itself caught between the push for process automation and the pull of cognitive stagnation, we believe AI’s true value lies not in accelerating execution—but in extending understanding; not in replicating experience—but in co-creating intelligence.

That’s why DigiHua goes beyond just deploying technology. We offer a comprehensive learning framework that enables AI to truly inherit frontline experience and grow with the organization. We call it “Shu-Ha-Ri”, a phased approach to implementation that establishes a shared learning and co-evolution logic between humans and systems.

While many companies remain stuck in the loop of “feeding data to AI and following its suggestions,” DigiHua takes a different path: starting with experience encapsulation, moving into human-AI collaboration, and ultimately building a continuously evolving organizational cognition system. This difference isn’t just technical—it’s philosophical. At our core, we don’t aim to teach people how to use AI; we want AI to learn how to work with people.

 

Shu (Preserve): Teaching AI Human Experience

Despite our 30 years of experience in the manufacturing sector, we continue to learn in the age of AI. Through ongoing discussions with clients, one insight stands out: AI implementation is not a game of catch—you can’t simply throw data at a model and expect the optimal answer. The first critical step is to teach AI what humans know, not just hand tasks over to it.

This isn’t just a matter of technical integration—it’s the craft of experience encapsulation. We start with frontline practices:

  • What conditions affect yield?

  • How do we distinguish whether an anomaly stems from materials, equipment, or personnel?

  • How do operators fine-tune machines?

  • What rules of thumb, intuition, or micro-adjustments never made it into SOPs but impact output?

These insights defy standardization. Instead of a one-time data dump, we adopt an iterative approach: through repeated dialogue, testing, and adjustment, we transform experience into reproducible, understandable, and adaptable AI knowledge modules. Just like training an apprentice, we guide the AI through constant practice, feedback, and framing—allowing room for early mistakes.

We call this “deliberate practice-based AI onboarding.” AI is not an all-knowing black box—it’s an apprentice of experience. This shifts not just the implementation logic, but the mindset—from building a predictive system to cultivating a learning partner.

 

Ha (Break): Challenging AI for Valuable Human-Machine Dialogue

AI becomes a true decision partner not by calculating faster, but by accepting challenge. You’ve probably asked ChatGPT a question, received an answer, then challenged it—only for it to say, “You’re right.” This raises doubt: Is AI helping us uncover blind spots or just agreeing?

This is why experience encapsulation in the Shu phase is so crucial. It gives you the confidence to say, “You’re wrong,” to the system.

Many companies fall into “model dependency” shortly after AI adoption. Once the system outputs a suggestion, staff follow it blindly—losing their own judgment mechanisms. But what we really need isn’t an agreeable assistant—it’s a system that sparks thinking and helps us detect the unseen.

In DigiHua’s framework, we intentionally design a human-machine dialogue mechanism, turning AI into a sparring partner for reasoning, not just a result provider. On the shop floor, this means involving workers in the reasoning process, observing the decision logic, and providing feedback when AI misjudges.

For example, when AI recommends a parameter set for process optimization, operators can challenge it based on real-world experience and provide supplemental context. The system will then re-evaluate and adjust its recommendation model. This is more than a feedback loop—it’s a cognitive upgrade: humans have the right to question, and AI has the opportunity to improve.

This turns AI from an authoritarian command center into a collaborative growth agent. From outsourcing → collaboration → dialogue, this is the true path to intelligent manufacturing. Only through dialogue can AI understand people, and only through challenge can organizations retain cognitive agency.

 

Ri (Leave): AI Agent as a Collaborator, Not a Substitute

The mature application of AI is not about eliminating the need for thinking—it’s about enhancing human thinking. At the Ri stage, DigiHua emphasizes not just a division of labor between humans and machines, but a more evolved partnership: AI becomes part of the enterprise’s cognitive system, forming what we call hybrid intelligence.

This means our AI systems must help humans understand information, detect anomalies, and raise questions—not make decisions on their behalf. Real factory intelligence lies not in handing over processes to AI, but in enabling staff to make faster, more responsible decisions with AI’s support. This is the essence of distributed intelligence in industrial settings: AI complements human limitations but never replaces human agency.

Our systems are designed with three core principles:

  • Transparency: AI’s logic and rationale must be explainable, allowing room for human challenge and discretion.

  • Accountability: AI proposes options; managers remain responsible for decisions and risk.

  • Decision structure redesign: Shift the focus from “automating processes” to “expanding human decision space.”

This also redefines the role of managers—from being the source of the right answers to becoming designers of learning environments that support experimentation and correction. That’s how AI adoption becomes flexible, sustainable, and truly value-adding.

The essence of Ri is to preserve human freedom and judgment—empowering us to reflect, define, and reframe problems rather than become mere question feeders. When AI becomes part of the organizational cognition system, wisdom remains within the enterprise, not just in models or individuals.

 

From Tacit Knowledge to AI Capital: Structuring Intelligence for the Future

Yet, for hybrid intelligence to truly take root, transparency and structure are not enough. AI must continually participate in judgment and interpret frontline context—which depends on whether tacit knowledge can be digitized and learned.

Thus, beyond designing decision structures, DigiHua establishes a “knowledge capitalization” mechanism to translate tacit expertise into digital assets—forming the basis for long-term AI learning and enterprise-wide decision support.

In daily manufacturing, what truly matters are not just numbers on reports, but the invisible logic that’s hard to write into SOPs or explain out loud:

  • Why does this line need preheating in advance?

  • Why does the machine sound different—could it be due to moisture in the material?

These judgments are the core of frontline wisdom—and the hardest for AI to grasp.

At DigiHua, we prioritize the structured encapsulation of tacit knowledge in our AI implementations. We don’t just build systems—we build mechanisms that can absorb, transform, and continuously refine human expertise, including:

  • Translating operator behavior and judgment into machine-learnable parameters and weights.

  • Designing “learning-in-action” and “post-operation feedback” loops so every use becomes a retraining opportunity.

  • Documenting key decision events as “knowledge episodes” to be referenced by new models and new hires.

With this approach, AI evolves from a data processing tool into a vessel of organizational memory, a node within the cognitive system. Only when this experience is curated, encapsulated, and institutionalized, can a company claim to own its intellectual capital—not just a rented black-box model.

This is what truly sets DigiHua’s AI Agent apart: we don’t just build systems for people to use; we build systems that help AI learn—preserving experience, generating value, and sustaining competitiveness.

 

6. Conclusion: Experience and Agency—The Foundations of a Truly Smart Factory

The Thinking Gap Behind Industrial Change: Is AI a Tool or a Replacement?

As we reflect on the preceding sections, a broader transformation in industry becomes evident: when experience fails to transfer, when veteran operators retire, and when enterprises begin to hand over judgment to algorithms, the ownership of thinking quietly shifts. While AI can indeed improve efficiency, if it’s seen merely as a tool for substitution, what we risk losing is the organization’s ability to learn, adapt, and self-correct.

We also see that many digital transformations follow the typical “three-step playbook”: automation, data platforms, and talent development. While this framework lays a solid foundation for factories, it often overlooks the most critical—and least digitizable—asset: tacit knowledge and human judgment.

 

It’s Not About Adopting AI—It’s About Teaching AI to Understand the Real World

DigiHua’s proposed Shu-Ha-Ri approach is precisely designed to bridge this gap. We don’t just help companies implement AI—we help AI learn and evolve with people. Our approach doesn’t stop at system integration; it ensures AI can continuously interact with the shop floor, receive feedback, and grow—eventually transforming into organizational cognitive capital.

AI can help you act—but it won’t take responsibility for the outcome. When decisions go wrong, models fail, or results fall short, the person held accountable will always be you. Handing over a process to AI doesn’t mean outsourcing responsibility. A mature organization isn’t one that offloads all judgment to systems, but one that designs a decision-making structure that allows for error tolerance, correction, and explanation.

Likewise, talent turnover and knowledge loss are now the industry norm. We can’t expect every skilled veteran to stay, nor can we stop young workers from pursuing new careers. But this doesn’t mean experience has to leave with them. The real question is whether your organization can transform that experience into lasting assets—not stored in memory, but embedded in systems; not locked in a person’s brain, but alive in processes and AI models.

 

Keep the Experience in the System, Not Just in People’s Heads

You may worry about your top talent being poached—but the real concern should be this: when people leave, does their experience leave too? Critical process adjustments, parameter logic, and nuanced know-how often reside in the minds of a few senior workers. When they exit, the organization risks losing a decade’s worth of learning and refinement.

At DigiHua, we believe that while people may be poached, a well-prepared factory can keep operating seamlessly. Forward-looking companies don’t just focus on talent retention—they invest in building their Enterprise Experience Intelligence (EEI), a structured knowledge repository where decision logic, evolving insights, and real-world cases are encoded, updated, and accumulated through AI systems.

Even if the next operator isn’t a seasoned veteran, the system can help them understand why a certain action is taken, when to make adjustments, and how past decisions evolved. This ensures experience stays within the company—not locked in a single employee’s memory.

 

More Than a System Upgrade—It’s a Transformation in How You Preserve Knowledge and Lead the Future

Smart manufacturing isn’t just about upgrading systems—it’s a transformation of how knowledge is preserved, responsibility is defined, and the future is shaped.

AI may help you move faster, but it’s still up to people to set the direction. Experience may fail to transfer naturally, but it must not be allowed to disappear. When a company possesses a system that converts experience into intelligent capital, it gains more than resilience against talent turnover—it captures the very essence of its learning and decision-making DNA.

Factories will keep evolving. People will keep moving. But only experience and agency, when truly systematized and passed on, can serve as the lasting foundation of a smart factory.

 

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